Merits and challenges of the
360-degree performance appraisal system
Merits of 360-degree performance
appraisal
The aim of any performance appraisal
system is to accurately gauge the performance of employees. The 360-degree
appraisal system is designed to provide an all-rounded view of the employee
where there is self-assessment, assessment by peers, assessment by
subordinates, and assessment by superiors. As Mamatoglu (2008) observes, the
appraisal has the impact of influencing the organisational culture promoting
mutual respect and a healthy work environment when workers realise that their
performance appraisal could be impacted by how their peers view them. This
diversified approach is aimed at providing an accurate view of the employee.
The strengths of this system are
outlined by Morgeson, Mumford and Campion (2005) as: encouraging open and
candid dialogues, encouraging formal and informal feedback, promoting
organisational learning, calling attention to more performance dimensions, and
change in the corporate culture. It is therefore a system whose benefits could
outweigh the cost is well-implemented with many analysts finding it most
suitable for application in the establishment of new organisational cultures
(Mamatoglu, 2008). This means that it can be easily applied to establish new
performance appraisal indices in a changing organisation.
Oh and Berry (2009) also make a strong
case for the 360-degree appraisal system by seeking to evaluate its impact in
managerial performance. This system was fronted as being more effective than
performance appraisal systems based on the supervisors of the managers whose
perspective was singular and mostly concentrated on a limited range of elements
in the managers’ performance. Using the 360-degree appraisal on the other hand
enabled an improvement in the validity of appraisal by factoring in personality
and other perspectives as captured by peers and subordinates (Oh and Berry,
2009). The all-round appraisal was therefore found to be more valid than
reliance on appraisal by superiors. There have however been many contrary
arguments on the reliability of the system.
Challenges of 360-degree
performance appraisal
One of the main weaknesses of the
360-degree appraisal approach is that it tends to be vulnerable to
misunderstandings of the roles of the individuals in the organisation (Hassan
and Rohrbaugh, 2009). Each peer is likely to have a unique perception of an
employee and would appraise them based on it. This heightens chances of
inaccuracy in appraisal as opposed to the traditional appraisal systems where
the roles and goals set are mutually agreed upon between the employee and
his/her superior. These perceptions could nevertheless be used as a source of
information on possible role evolution of different roles within the
organisation (through design of performance indexes) hence turning this
disadvantage into an advantage (Deng, 2010). The system can be said to be prone
to lack of openness within the organisation.
Morgan, Cannan and Cullinae (2005) put
some of the theoretical benefits of the 360-degree appraisal to the test. In
particular, they sought to evaluate the argument that the appraisal system
encourages self-awareness among individuals hence motivating personal
development and performance. The study found that the system failed to generate
the required levels of self-awareness anticipated and was also not
corresponding to the organisation’s overall strategies. This demonstrates that
the system is vulnerable to organisation-specific intrigues with some of the
aspects responsible for the same being little open discussions and little
commitment by the top management.
According to Overeem et al (2009), the
360-degree appraisal system cannot be effective where there is little
commitment from top management and where there is a low degree of openness. It
yields positive results where employees are free to gauge each other openly and
accurately. In a 2007 study on 109 consultants in Netherlands, Overeem et al
(2009) decried the fact that the 360-degree appraisal system also tended to
lack mechanisms for turning information gathered into an instrument for
motivating employee performance. Follow up interviews were found to be
essential for purposes of ensuring that information gathered can be used to the
advantage of the employee and the organisation as a whole. This finding was
reiterated by Sanwong (2008) who observed the fact that follow-up interviews
are not only essential but also a great opportunity for encouraging openness
and a healthy organisational culture.
The results of the 360-degree could also
be easily misinterpreted making it necessary for one to understand the
organisational context before making conclusions. This is demonstrated by Porr
and Field (2006) in a study on 60 retail stores in the USA. In this study, managers
were rated differently by subordinates and superiors. While the subordinates
would rate the managers based on the performance of internal processes, the
superiors would gauge them based on the overall performance of the stores. This
means that the cost of implementing such a system is always very high often
requiring frequent studies and discussions to understand how different groups
within the organisation rate their colleagues (Deng, 2010). This perspective on
variability of ratings can also apply to gender and other characteristics of
the employees.
Millmore, Biggs and Morse (2007) however
dispute the presence of biases based on gender. In a study on 66 managers drawn
from both genders, the study found no evidence of discrimination or unfair
appraisal for either gender irrespective of the persons conducting the
appraisals. In spite of these justifications, evidence on the variability of
the system remains overwhelming. Nevertheless, the system is not devoid of
certain grave challenges. Sillup and Klimberg (2010) evaluate the ethical
aspects of implementing certain performance appraisal systems. It brings to
fore the considerations that ill will is hard to prove and therefore difficult
to prove in the performance appraisal systems. This is especially with regards
to evaluation by peers where their rating is not subject to much scrutiny nor
accompanied by the requirement to justify the ratings given.
This means that an employee could rate a
peer poorly based on personal reasons such as general dislike or the need to have
them perform poorly to create an advantage for themselves in case of future
promotions (Sillup and Klimberg, 2010). This loophole could also lead to
worsening of relations where employees may bear grudges against peers who rate
them poorly. This ethical viewpoint and the resultant threat of backlash for
misunderstanding could motivate peers to provide favourable ratings even when
the same is not justified. The system is therefore prone to high levels of
inaccuracy. This is of course different from the traditional appraisal system
where managers are often faced with a high threshold for justifying their
appraisals from time to time. Despite these weaknesses, the 360-degree
appraisal can be very useful.
In a study conducted on New Medical
Graduates in the UK, Hesketh et al (2005) hailed the appraisal system as very
effective in enabling the identification of poor performance and providing
avenues for corrective actions to be taken. The study accordingly proved that
the implementation of the 360-degree appraisal system was feasible and capable
of motivating robust performance in organisations. Oz and Seren (2012)
reiterate these views by pointing out that the 360-degree appraisal system
motivates employees to drop defensiveness and gaining a better understanding of
their capabilities as viewed by peers. This makes it easy for them to know how
to improve their performance and be more productive. In reference to the
creation of a strong organisational culture, the resultant accountability to
peers puts employees in a situation where each employee has to be mindful of
what their peers think about them and their actions (Oz and Seren, 2012). This
can be exploited to create synergy and an organisational culture that promotes
productivity in a very unique way.
Summary and grounds for future
research
In summary, the 360-degree appraisal can
have many challenges as pointed above. These may include lack of top management
commitment, unethical practices by peers and subordinates during appraisal,
variation in understanding of roles hence inaccuracy in appraisal and the high
cost of implementing the same. Despite these weaknesses, there is a sense of
general consensus that the system does help in making organisations healthier
and more competitive. The system has the capability of encouraging greater
accountability among peers, creation of an open and health working environment,
and the identification of new measures for gauging performance. In spite of
this, there is need for period studies to be conducted on the perceptions of
various employees in an organisation to ensure that their perceptions of
certain job roles are accurate. There is also need to conduct periodic
assessments on organisations implementing the 360-degree appraisal with a view
to ensuring that all the requisite elements for effectiveness are in place.
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